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Avendus PE Investment Advisors Pvt. Ltd, the PE arm of Avendus Capital, is in the process of launching a series of special situation funds for investments in listed entities.

The PE arm, which has invested 80% of its first fund, special situation fund I, is set to launch its Fund II with a proposed corpus of $100 million. Earlier, it had a plan to launch a Rs 1,000-crore PE fund.

Avendus PE, which targets listed mid-sized companies, has invested in six firms including TTK Prestige Ltd, Camline, Gujarat Apollo Industries and Pratibha Industries Ltd through its first fund. It has already exited from its investment in TTK Prestige with 3x return. The size of the first fund could not be ascertained.

Manoj Thakur, CEO, Avendus PE, told VCCircle, “We see tremendous potential in investing in small-cap and mid-cap listed companies with private equity evaluation approach. With large amounts of un-invested private equity capital, there is too much competition for quality deals. We believe the listed companies offer reasonable entry valuations and consequently superior risk adjusted returns. We deployed 80% capital from our first fund in this strategy and delivered 57% IRR.”

Avendus PE has started raising its second fund, which will be a mixture of domestic and offshore. The fund is expected to be closed by November 2010 and investment would be completed in one year’s time.

“We prefer special situation cases in the listed space where the companies are either entering new businesses/ new product categories, undergoing turnaround, or benefiting from the regulatory changes happening in our country,” Thakur added. However, he did not reveal Avendus’ contribution to its second fund.

So far, about 21 PIPE (private investments in public equity) transactions worth $577 million have taken place in 2010, according to VCCedge data. The top deals include $179-million investment in IDFC by Khazanah Nasional Berhad and Actis LLP, $85-million investment by GIC Special Investments Pte Ltd in in Fortis Healthcare, $22-million investment in Cholamandalam Investment and Finance Company Ltd. by International Finance Corp and $54-million investment in Nectar Lifesciences Ltd. by New Silk Route Partners. In 2009, about 44 PIPE deals took place worth $715 million.

Centrum Capital also reportedly plans to launch its own private equity fund with a corpus of $100-125 million. In March, Mint had reported that Centrum Capital plans a PE fund with a corpus of $100-125 million through domestic sources such as institutional and retail investors. The firm had hired Shivani Bhasin, former principal at IDFC Private Equity. Edelweiss, which terminated its joint venture in PE space with Blue River Capital, also plans a new fund.